Streamline skills management, identify skill gaps, and drive strategic workforce planning with our step-by-step skills taxonomy playbook.
A skills taxonomy refers to a structured framework or classification system that categorises and organises the various skills and competencies within a specific industry, organisation, or field of expertise. It provides a standardised and consistent way of identifying, describing, and grouping skills based on their characteristics, levels of proficiency, and relationships to other skills.
Here are some definitions of a skills taxonomy in the context of business:
“A skills taxonomy is a structured list of skills defined at the organisation level that identifies the capabilities of a business in a quantifiable way.”
Source: AIHR
“Skills taxonomies offer a way to manage and identify the skills that make your business and your employees successful.”
Source: Linkedin Learning
Several country/region/industry skills taxonomies exist. They include:
Developing a skills taxonomy is regarded as the cornerstone of a skills-based approach. By establishing a common language and framework for skills, a skills taxonomy helps organisations better understand their employees' skill sets, identify skill gaps, match talent to specific roles or projects, and make informed decisions related to recruitment, training, and career development. All this facilitates effective skills management, talent development, workforce planning, and other HR processes.
The utilisation of a skills taxonomy to drive skills management and strategic workforce planning is not a new trend. Multinational companies have deployed them in the past to optimise workforce utilisation. However, today, the introduction of technology, including AI, has revolutionised the way organisations manage skills by enabling more efficient identification, visualisation, and utilisation of employee skills, facilitating targeted training and development programs, and supporting data-driven decision-making in talent management.
By using smart skills management software, companies can now seamlessly and efficiently ensure that the right skills are matched with the right opportunities, enabling agile responses to changing business needs, and ultimately driving organisational success.
Before we go on to outline the five steps to creating a skills taxonomy, it is important to remember that the process is not a one-time exercise but an ongoing process that requires a systematic approach because it has an impact on various aspects of an organization, including recruitment, internal mobility, growth and development, diversity, and pay.
Form a project team comprising representatives from various departments within your organisation. It should include key stakeholders who will benefit from the skills taxonomy. By involving representatives from different sections, you ensure alignment and a shared understanding of the taxonomy’s objectives and implementation across all departments.
With the project team in place, convene a meeting to discuss the following question: “What are the critical issues that a skills taxonomy will help resolve?” This will help you compile a comprehensive list of benefits that your organisation stands to gain through the implementation of a skills taxonomy. These advantages may range from identifying employees who need training or upskilling to take on additional responsibilities or fill vacant positions, to optimising internal talent allocation to reduce the need for external hiring.
Below is a list of the various benefits of creating a skills taxonomy, presented in no order of importance:
By leveraging a skills taxonomy, organisations can unlock all these benefits to optimise their workforce, drive growth, and foster a culture of continuous learning and improvement.
Let’s be realistic here. Building a skills taxonomy for the entire organisation from scratch is quite a big ask. Instead, focus on two to three areas and once those are established and the project team and stakeholders understand the concept better, you can expand it into the rest of the organisation.
HR expert and thought leader Josh Bersin suggests that organisations working on skills taxonomy projects start with a strategic business need and expand from there. He suggests to initially focus on the following three specific functional domains and involve subject matter experts in the exercise:
Bersin also cautions organisations that while they are focusing on internal skills for the taxonomy, they shouldn’t neglect monitoring external skills such as emerging skills and competencies that may be vital to acquire soon if the organisation is to stay competitive.
At MuchSkills, we suggest that our clients consider two primary aspects while deciding what skills to include in the skills taxonomy. The skills identified should:
When it comes to assessing and validating skills, organisations can explore various methods to ensure accuracy and reliability. These include self-assessment, manager assessment and external certifications.
By leveraging a combination of self-assessment, manager assessment, and external certifications, organisations can gain a comprehensive and well-rounded understanding of their employees’ skills and ensure a robust validation process. Whatever method chosen, the quality of your data will depend on the design of the framework in place to capture this assessment.
Having said that, when it comes to assessing skills within the organisation, it is important to remember that a one-size-fits-all approach may not be necessary. Clients often express concerns about the accuracy of skill mapping, especially when self-assessment is involved. However, taking a broader perspective can help address these concerns and foster a more open environment for employees to share their skills. Here's a guide to help you optimise skills validation for effective workforce planning:
By following these guidelines, you can optimise the skills validation process for effective workforce planning. Remember, the key is to strike a balance between validating essential skills and fostering a culture of self-reflection and open discussion between employees and managers.
With MuchSkills, organisations can seamlessly integrate all three assessment methods, enabling organisations to leverage self-assessment, manager assessment, and external certifications in a single platform for a streamlined and holistic approach to skills assessment and validation.
A skills inventory entails creating a comprehensive and detailed list of all the skills and educational qualifications present within the organisation. Combining a skills taxonomy (representing the skills required for organisational success) with a skills inventory (reflecting the existing skills within the organisation at a given time) allows for conducting a thorough skills gap analysis. This analysis sheds light on any crucial skills that may be lacking, enabling you to chart an informed path forward, whether it involves training, learning and development initiatives, or strategic hiring decisions.
For this section, we assume you are already a MuchSkills user. If you aren’t, here are a few tutorials you might want to read first:
Once you are up to speed about how to use MuchSkills (and if you are already using MuchSkills) you can use ‘Custom Skills’ to list your skills taxonomy.
In MuchSkills, click on ‘TEAM/ORG’ in the top menu and then click on the ‘Settings’ tab on the right. Click on ‘Manage Skills’ and then ‘+ Skill Category’. Add a name for your skill set – let’s call it ‘Essential Skills'– and choose the sector chart. If you are not so keen on measuring skill levels but would like to collect interest-based or experience-based data instead, then use the bubble chart visualisation where users can quickly list and rank their experience/interest in a domain or subject.
Note: You can make custom skill categories for several critical skill categories but it’s best not to add too many because that can be overwhelming for your employees. Below are some suggestions for custom skill categories along with examples of those skills:
One by one, add the skills you have ascertained must be present in your skills taxonomy, a description of each of those skills, which department’s members should select the listed skills, and whether the skill is mandatory.
Important: Do remember that skill descriptions are an important part of a skill taxonomy. The more specific you are here, the less the chances of individuals interpreting it differently. Specific skill descriptions in your taxonomy will help you get a more accurate picture of skills growth or gaps if any.
For more details on how to use the ‘Custom Skills’ function, go to this guide: How to set up custom/company specific skills for your organisation
Once you have populated your custom skills, you have a baseline in terms of the skills your organisation must have to be successful. You can now compare the skills available in your organisation (your skills inventory) against this baseline to identify any skill gaps and take remedial action. So, do get your employees to map their skills on MuchSkills if they haven’t already because that will be your skills inventory.
Finally, conduct a skills gap analysis. Here are two resources you can use to help you:
Playbook: Skills Gap Analysis: A complete guide
To conduct a skill analysis on MuchSkills watch this video: How to conduct a skill analysis and skills gap analysis
Imagine your company provides a unique consulting service that uses your own proprietary software to help your customers. You are curious about how well your own team knows the software itself. On doing a skill mapping on MuchSkills you realise, just 10% of your workforce are experts in a software that is core to your business 🙀. You need to fix that ASAP, right?
Is all of this too much work for you?
At MuchSkills, we can help you define the key skills of your entire organisation or specific key departments, teams and roles and also conduct a skills gap analysis with recommendations.
In a set of workshops we will define the organisation’s skill taxonomy and the skills required for key roles. We break them down into smaller chunks to make it clear exactly what the skills consist of. The assessment will include any custom skills as well as MuchSkills out-of-the-box skill categories such as job focus, soft skills, technical skills and certifications.
Once we help you create a skills taxonomy, using a proven methodology we will collect skill and skill level data through an employee self-assessment mapping. All data will be collected using the MuchSkills tool and will be readily available for the organisation after the project.
Using the collected data, we will analyse your current skills state to identify:
Research has highlighted the importance of developing new skills to adapt to workplace changes, tackle the challenge of identifying and managing necessary skills within organisations, and avoid the negative consequences of weak skills management. These studies highlight the need for individuals and organisations to continuously acquire new skills, address the inability to identify and utilise needed skills, and emphasise the economic impact of skills shortages on productivity and profitability.
The creation of a skills taxonomy emerges as the most effective approach to address the challenge of identifying and managing skills within organisations, providing a structured framework to categorise, track, and leverage skills across various functional domains and workforce segments.